​Question:Can we allow borrowers to use the maximum deductible available to reduce the cost of flood insurance?

Answer:It’s permissible, but the Bank should not allow it in every case. The Bank should determine “the reasonableness of the deductible on a case-by-case basis, taking into account the risk that such a deductible would pose to the borrower and lender.” Note that the Bank also should not allow the borrower to use a deductible equal to the insurable value of the property in order to avoid having to purchase flood insurance.